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People and Planet in the Accounts: let’s measure what we treasure

Author: ICAEW Insights

Published: 24 Nov 2020

Coca-Cola European Partners has been measuring all sorts of business parameters for years. Michael Clark, Vice President – Enterprise Performance Management, explains this makes sound business sense and also feeds the sustainability agenda.
A modern glass office building, two people and a leafy tree

Packaging, climate, water, the drinks themselves, society, the supply chain – data on all these parameters are found in Coca-Cola European Partners’ (CCEP) Key performance data. From this data set, we can see that in 2019 there had been a 12.9% reduction in average sugar per litre in CCEP’s soft drinks portfolio since 2015, 30.5% of the material used in 2019 in its plastic bottles was from recycled plastic and 97% of its spend was with suppliers which are covered by CCEP’s Supplier Guiding Principles. What is more, 35.5% of management positions were held by women.

In 2019, all of CCEP’s manufacturing sites had implemented Source Water Protection Plans; and there had been a 52% reduction in greenhouse gas emissions in its core business operations since 2010.

The CCEP Sustainability Action Plan spans the years 2010 to 2025 and, while it helps to know what you are looking for to make sense of the data, it is clear that CCEP treasures this data and is building it out to deliver a clear indication of where the business started on the ESG front and where it is headed. All this data is funnelled into the company report and, points out Clark, CCEP is listed on the Dow Jones Sustainability Index – a testament to all the work it is doing in this area.

“Collecting this data is now part of our DNA,” says Clark. “Over the years, the extent of the data we collect has become more expansive.”

It is often not easy to collate. “Greenhouse gas emissions are the hardest thing to measure. It is a product of much of what we and our supply chain do. You can’t not have a handle on your packaging or your supply chain and be able to measure your emissions. It’s complicated and you cannot push a button and get a view of emissions data – it takes a lot of calculation.” And let’s remember, CO2 is very much a headline metric, especially in the UK.

The problem is also visibility of data outside the company. For example, CCEP does not manufacture aluminium so, for its metrics to stack up, discovery around the carbon footprint of its aluminium suppliers is essential. The accuracy of that data depends on suppliers’ processes.

So, in the final analysis, is it a business decision to measure all these parameters? “Yes,” responds Clark. “But it also often makes business sense. As a chartered accountant, doing more with fewer resources is generally a good thing and will often save you money.” He points out that, for example, previous generations of packaging were much thicker, heavier and more expensive. There has been both a business and environmental impact of that change.

However, some changes sit squarely in the climate camp alone. For example, the drink-dispensing fridges we see in retail areas are a case in point. “They use quite a lot of power,” says Clark. “We’ve changed the doors and the lighting. They all sit in retailers and restaurants. There is no direct monetary benefit to us of doing that. but we hope that our customers appreciate that we are doing the right thing environmentally.”

But being accountable is a great business behaviour, even if you cannot judge, in the short term, what the business benefit will be.

“My personal view is that, probably around five years ago, a good company would have some kind of ESG dimension,” he says. “I think now it is very difficult to not have one. It has become something that is just required. It is obviously easier if you have been on the journey already.” Clark also points out that some of CCEP’s financing in the future may be via green bonds, so there may be a very real financial advantage to the CCEP approach.

But collecting all this data is a time-consuming process. To speed it up, CCEP’s senior manager long-term incentives now contain a metric related to CO2 reduction – quite a ground-breaking development – and it assists hugely with the collection of that data. “This also drives behaviour internally,” he points out.

In the final analysis, transparency and traceability are vital, says Clark. The presentation of data is simply the proof of that work, but it also goes a long way towards making sure business is accountable for its actions.